Rentech to merge with CVR

Published 4:00 pm, Tuesday, August 11, 2015

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HCN NEWS SERVICES

Sugar Land-based CVR Partners, LP will combine with Rentech Nitrogen Partners, LP to create a North American nitrogen fertilizer leader, the companies announced Monday (Aug. 10). The combination excludes Rentech Nitrogen's Pasadena facility, which will be retained by current holders of Rentech Nitrogen, or sold separately for their benefit.

Total consideration for Rentech Nitrogen excluding the Pasadena facility is $533 million, implying a total enterprise value of approximately $839 million, based on closing prices on August 7, 2015. The transaction is the culmination of a strategic review process publicly announced by Rentech Nitrogen on February 17, 2015.

Rentech Nitrogen shareholders will receive 1.04 units of CVR Partners and $2.57 cash for each unit held. Rentech Nitrogen, a master limited partnership of Rentech Inc, will own 40.5 million units, or 35.6 percent of the combined company.

“We believe this combination with CVR Partners is a compelling opportunity to create value for Rentech Nitrogen's unitholders. The transaction is structured to provide our unitholders with significant value, as well as the chance to participate in future value creation in a combined partnership that is well-positioned for success,” said Keith Forman, chief executive officer of Rentech Nitrogen. “We believe that the resulting company will benefit from larger scale; diversification of plants, feedstocks, and markets; and reduced costs. We intend to immediately return to a focused process to sell the Pasadena facility, before the closing of the merger with CVR Partners.”

CVR Partners, owned by Carl Icahn-controlled CVR Energy Inc , will refinance Rentech Nitrogen's net debt of about $307 million. The deal is expected to close by the end of 2015 and no later than May 2016, the companies said.

“The merger of CVR Partners and Rentech Nitrogen Partners creates a new leader in the growing nitrogen fertilizer industry. Once the merger is complete, we will be the second largest producer of urea ammonium nitrate (UAN) in North America,” Jack Lipinski, executive chairman of CVR Partners, said. “In addition to enhancing our current attractive market position, we expect the merger will be double-digit accretive to distributable cash per unit before synergies. The combination of our two strategically located fertilizer assets in Kansas and Illinois, a strong combined balance sheet and highly experienced management teams positions the merged companies to generate long-term value for unitholders.”

Rentech Nitrogen expects to increase its ammonia production by 50 tons per day, and reduce energy input for each ton of ammonia produced by 1.3 MMBTU beginning in the second half of 2016, following the completion of the new ammonia converter project that is currently underway.

Rentech Nitrogen will distribute to its unit holders, pro rata, net proceeds of any future sale of the Pasadena facility. There can be no assurances that the Pasadena facility can be sold prior to the closing date of the merger or at all.

The cash portion of the consideration is expected to be taxable to Rentech Nitrogen unitholders while the distribution of units in CVR Partners is expected to be tax-free.

About Rentech Nitrogen, L.P.

Rentech Nitrogen (www.rentechnitrogen.com) was formed by Rentech, Inc. to own, operate and expand its nitrogen fertilizer business. Rentech Nitrogen's assets consist of two fertilizer production facilities owned by its operating subsidiaries. The East Dubuque facility is located in the northwestern corner of Illinois, and uses natural gas as a feedstock to produce primarily anhydrous ammonia and UAN solution for sale to customers in the Mid Corn Belt. The Pasadena facility is located in Pasadena, Texas, along the Houston Ship Channel; it uses ammonia and sulfur as feedstocks to produce ammonium sulfate and ammonium thiosulfate fertilizers, and sulfuric acid. Rentech Nitrogen is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America, with sales in the United States and internationally.